State Panel to Study Pay Of Leaders at Nonprofits

By RUSS BUETTNER

Published: August 4, 2011

Gov. Andrew M. Cuomo announced on Wednesday the creation of a task force to investigate executive compensation at nonprofit organizations that receive taxpayer subsidies from the state.

The governor said the organizations had ''a special obligation to the taxpayers that support them.''

''Executives at these not-for-profits should be using the taxpayer dollars they receive to help New Yorkers, not to line their own pockets,'' Mr. Cuomo said.

An article in The New York Times on Tuesday highlighted salaries at nonprofit organizations that provide Medicaid-financed services to developmentally disabled New Yorkers. It focused on two brothers and the agency they had led since the 1970s, the Young Adult Institute.

The brothers, Philip and Joel Levy, received close to $1 million a year each at the peak of their earnings. As part of their compensation, the brothers and other executives were allowed to bill the institute for the costs of their children's college educations.

Philip Levy also charged the organization $50,400 for his daughter's living expenses one year, money that went toward her purchase of a co-op apartment in Greenwich Village. Both brothers retired abruptly at the end of June.

The article in The Times appeared with a list of executives of other providers of Medicaid-financed services to developmentally disabled people who were paid more than $500,000, most considerably above the average chief executive salary for similarly sized nonprofit groups in the state.

Mr. Cuomo's announcement called the salaries reported in the article ''startlingly excessive.''

''There is a whole range of compensation levels and extremes that have existed for too long and must be reviewed,'' he said in the announcement.

There are no state rules governing executive or administrative compensation at groups that receive state subsidies. The task force will audit current compensation levels and recommend rules to ensure that money is not wasted on ''excessive salaries and compensation,'' the announcement said.

The task force will be led by the New York State inspector general, Ellen N. Biben; Secretary of State Cesar A. Perales; the state Medicaid inspector general, James C. Cox; and the superintendent of the Department of Financial Services, Benjamin M. Lawsky.

The nonprofit groups may lobby against efforts to regulate compensation.

Doug Sauer, chief executive of the New York Council of Nonprofits, suggested that the governor's task force should also examine the compensation of executives at for-profit companies working under state contracts in other areas of government.

Mr. Sauer said that he supported efforts to root out cases in which ''charitable resources are used for the private and personal gain of executives,'' but that such cases were rare and subject to existing Internal Revenue Service guidelines.

This is a more complete version of the story than the one that appeared in print.